UK CBAM: The Complete Guide for Importers

The UK Carbon Border Adjustment Mechanism (UK CBAM) is a new tax on imported goods entering the United Kingdom. It applies to specific goods in five sectors — aluminium, cement, fertiliser, hydrogen, and iron and steel — and charges a rate based on the embedded carbon emissions in those goods. It comes into force on 1 January 2027.

The policy's purpose is to ensure that imported goods face a carbon price equivalent to what UK domestic producers pay under the UK Emissions Trading Scheme (UK ETS). Without UK CBAM, UK manufacturers would be at a competitive disadvantage — they pay for their carbon, while imports from countries with weaker climate policy do not. UK CBAM levels that playing field.

HMRC is the administering authority. The legislative framework was completed on 8 September 2026 with the Emissions and Verification Regulations (S.I. 2026/995). Default values and the first CBAM rate are still to be published; see the rules tracker for the latest status.

UK CBAM only applies if your imports of covered goods exceed £50,000 in customs value. This threshold is tested in two ways:

• 1.
  Rolling 12-month look-back. Checked on the first day of each month. If the customs value of your covered imports in the preceding 12 months exceeded £50,000, you must register. Imports before 1 January 2027 do not count towards this test.
• 2.
  Forward-looking 30-day test. If at any point you expect to import £50,000 or more of covered goods within the next 30 days, you must register. This catches seasonal or lumpy import patterns.

Meeting either test triggers the obligation to register with HMRC. The threshold applies per importing entity, not per group. Connected companies can apply for group treatment so one representative member files for the group.

Your CBAM liability is calculated using a straightforward formula:

Embedded emissions means the direct (Scope 1) emissions from producing the good, including emissions embodied in precursor materials further up the supply chain. For example, the steel inside a fastener, the clinker inside cement, and the ammonia inside fertiliser all carry their own embedded emissions. Indirect (electricity) emissions are excluded until 2029 at the earliest.

The CBAM rate is set by HMRC and varies by sector and quarter. These rates are published in advance and are designed to align with the UK ETS allowance price. Oremly maintains a current rate table and applies the correct rate automatically.

You can use either verified supplier data or HMRC's default values to determine your embedded emissions — but see the default values section below for a critical rule that makes this choice consequential.

If your supplier does not provide verified emissions data in time, you must use HMRC's default values to calculate your liability. These default values are intended to be set at a level where there is no financial advantage to using defaults over real data — in practice, they are expected to be higher than most suppliers' actual emissions.

This rule has direct commercial consequences. An importer who waits too long for supplier responses and files on defaults will overpay for the entire period. The overpayment cannot be recovered later. This is why the supplier chase process — automated, persistent, with clear escalation — is the most important operational workflow in CBAM compliance.

If a carbon price was already paid in the country of origin on the imported goods, you can deduct that amount from your UK CBAM liability. This is known as Carbon Price Relief (CPR).

To claim CPR, you need evidence of the carbon price paid in the country of origin. HMRC expects this to be documented and verifiable — a certificate from the relevant authority, a carbon tax receipt, or equivalent documentation from an emissions trading scheme. The evidence must show the amount of carbon price paid per tonne of CO2e and must be attributable to the specific goods being imported.

Without adequate evidence, the CPR claim will be rejected by HMRC, and you will pay the full CBAM rate on those imports. Oremly flags imports from countries with known carbon pricing schemes and prompts you to request evidence as part of the supplier data workflow.

Once you determine that you exceed the £50,000 threshold, you must register with HMRC through the CBAM service accessed via your Government Gateway account. The registration process requires:

• •Your entity details including company number, registered address, and VAT number
• •An overview of your covered imports by sector and estimated annual volume
• •A list of your overseas suppliers and their contact details
• •Confirmation of your liable person status (importer of record or group representative)
• •A nominated contact for CBAM matters within your organisation

There is no fee to register. Registration is not required before you first exceed the threshold, but you must be registered before your first return is due. The backstop date for businesses first liable during 2027 is 31 January 2028.

Oremly automatically compiles a registration pack from your import ledger data, organised in the same field order as HMRC's registration service. You review the pack, make any corrections, and submit it through your own Government Gateway account.

HMRC expects importers to maintain a complete and auditable record of every CBAM-related calculation and transaction. The minimum retention period is six years, consistent with other tax record keeping requirements.

You must retain, at minimum:

• •Import ledgers showing commodity codes, customs values, net weights, countries of origin, and import dates for every covered shipment
• •Supplier emissions data, including the original documents and any correspondence
• •Evidence of Carbon Price Relief claims, including certificates and calculation methodology
• •The basis for using default values, including records of supplier chase attempts and cutoff dates
• •All CBAM returns filed with HMRC, including supporting calculations and audit trail

Oremly stores every piece of evidence in a checksummed vault with SHA-256 hashes verified on every retrieval. The append-only audit log records every action taken in the system. Nothing can be deleted or edited after the fact. When HMRC inspects, you can produce a complete, tamper-evident record of your compliance.

HMRC has a full range of enforcement powers for UK CBAM non-compliance. These include:

• Failure to registerIf you are liable during 2027 and do not register by 31 January 2028, you face financial penalties and potential interest on unpaid liability from the date it first accrued.
• Failure to fileMissing a return deadline triggers automatic penalty assessment, escalating with the duration of the delay.
• Inaccurate returnsSubmitting an incorrect return — whether through error or omission — can result in penalties based on the amount of underpaid liability. Because CBAM returns cannot be amended, an error in a filed return stands until the next period.
• Inadequate recordsFailure to maintain proper records can result in penalties separate from any tax liability assessment. HMRC may also impose penalties for failure to provide information when requested.

Beyond direct penalties, the most common financial consequence of non-compliance is overpaying through the use of default values — which are set above market rates by design. An importer who fails to collect supplier data will pay more in CBAM liability for the lifetime of the regime, not just as a one-off penalty.